BILL ANALYSIS Ó SB 647 Page 1 Date of Hearing: June 27, 2011 ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Henry T. Perea, Chair SB 647 (Committee on Judiciary) - As Amended: June 16, 2011 Majority vote. Fiscal committee. SENATE VOTE : 38-0 SUBJECT : Civil law: omnibus bill SUMMARY : Contains numerous civil law provisions authored by the Senate Judiciary Committee. Specifically, the tax-related provisions of this bill add amounts due under Welfare and Institutions Code (W&IC) Section 903.1 to the list of delinquent fines and penalties that may be referred to the Franchise Tax Board (FTB) for collection. W&IC Section 903.1, in turn, imposes joint and several liability on specified individuals, including parents, for expenses incurred by a county or court for legal services provided to a minor pursuant to a juvenile court order. EXISTING LAW : 1)Allows superior courts, counties, and the state to refer certain delinquent fines and penalties to the FTB for collection under guidelines prescribed by the FTB. Once delinquent for 90 or more days, all of the following may currently be referred to the FTB: a) Fines; b) State or local penalties; c) Bail; d) Forfeitures; e) Restitution fines; f) Restitution orders; and, g) Any other amounts imposed by a superior court that are SB 647 Page 2 due and payable in an amount totaling at least $100, in the aggregate, for criminal offenses, including all offenses involving a violation of the Vehicle Code. ÝRevenue and Taxation Code (R&TC) Section 19280(a)(1)] 2)Specifies that, once the FTB provides a debtor with written notice, any delinquent amount so referred (plus applicable interest), shall be treated as due and payable to the state, and shall be collected from the debtor in any manner authorized for the collection of a delinquent personal income tax liability. ÝR&TC Section 19280(c)] 3)Provides that, if a county or court incurs expenses for legal services provided to a minor pursuant to a juvenile court order, the following shall be jointly and severally liable for the cost: a) The father; b) The mother; c) The spouse; d) Any other person liable for the minor's support; e) The estate of "that person" (ostensibly meaning any person named above); and, f) The minor's estate. ÝW&IC Section 903.1(a)] 4)Specifies that the above-named individuals and estates (with the apparent exception of the minor's estate) shall also be liable for any cost to the county or court for legal services directly rendered in a dependency proceeding to the father, mother, or spouse of the minor pursuant to a juvenile court order. ÝW&IC Section 903.1(a)] 5)Directs the Judicial Council to establish a program to collect reimbursements from those persons liable for the costs of counsel pursuant to W&IC Section 903.1 in dependency proceedings. As part of this program, the Judicial Council must adopt: a) A statewide standard for determining one's ability to pay reimbursements for counsel; and, SB 647 Page 3 b) Policies and procedures allowing courts to recover from the money collected the costs associated with collecting delinquent reimbursements. ÝW&IC Section 903.47(a)] 6)Provides that, except as otherwise authorized, the money collected under this program shall be used to reduce the caseloads of attorneys appointed by the court. ÝW&IC Section 903.47(a)] FISCAL EFFECT : The FTB estimates that this bill would not impact state income tax revenues. COMMENTS : 1)SB 647 is the Senate Judiciary Committee's omnibus bill. The Senate Judiciary Committee's own analysis of this bill notes, "To be considered for inclusion, each provision must be non-controversial and not be so substantive as to be more appropriate for a stand-alone bill. If a non-controversial provision later becomes controversial, that provision will be removed from the bill." 2)The FTB notes the following in its staff analysis of this bill: a) "This bill would allow the FTB to collect specified legal costs relating to an order of the juvenile court. Specified legal costs would include the costs for counsel appointed to represent parents or minors pursuant to dependency proceedings." b) "The FTB currently collects fines; Ýsic] state or local penalties, forfeitures, restitution fines, restitution orders, or other amounts imposed by a superior or municipal court of the State of California referred from courts of 43 participating counties and maintains an inventory of approximately 1.1 million cases. ÝCourt ordered debt] collection is accomplished primarily through the use of wage garnishments and bank levies." c) "This bill would not impact the department's costs because the cost to the FTB to collect these reimbursements debts would be deducted from any amounts collected prior to being distributed. The FTB's Ýcourt ordered debt] system SB 647 Page 4 can accommodate the increase in the workload that this bill is expected to generate." 3)Committee Staff Comments: a) Sponsor and purpose : The Judicial Council is sponsoring the tax-related provisions of this bill. Specifically, the Judicial Council states that this proposal "would improve the ability of the court to generate revenues for court appointed counsel in dependency matters by . . . providing courts that use FTB for other court ordered debt collections with the ability to use their services for this court-ordered debt as well." b) Background : In 2009, Governor Schwarzenegger signed into law AB 131 (Evans), Chapter 413, Statutes of 2009. Among other things, AB 131 directed the Judicial Council to establish a program for collecting reimbursements from persons liable for the costs of counsel appointed to represent parents or minors pursuant to W&IC Section 903.1. AB 131 also provided that the money collected under this program must be used to reduce the caseloads of attorneys appointed by the court. Unfortunately, Judicial Council staff notes that the program is currently underfunded, and that attorney caseloads do not meet the standards established by the Judicial Council. The Judicial Council believes that the proposals included in this bill will help to mitigate the underfunding of this program and will promote better service for abused and neglected children and their parents in dependency proceedings. c) Related legislation : i) AB 2928 (Spitzer), Chapter 752, Statutes of 2008, authorized the Department of Corrections and Rehabilitation to refer restitution orders to the FTB for collection, as specified. ii) AB 367 (De Leon), Chapter 132, Statutes of 2007, directed the Judicial Council to establish a task force to evaluate criminal and traffic-related court-ordered debts imposed against adult and juvenile offenders. AB 367 also lowered the minimum balance requirement for referral of debts for collection to the FTB to $100. SB 647 Page 5 REGISTERED SUPPORT / OPPOSITION : Support Judicial Council of California (sponsor of tax-related provisions) Opposition None on file Analysis Prepared by : M. David Ruff / REV. & TAX. / (916) 319-2098